NATIONAL UNION OF WORKERS IN HOTEL
RESTAURANT v. PHILIPPINE PLAZA HOLDINGS, GR No.
177524, 2014-07-23
FACTS:
The Union is the collective bargaining agent of the rank-
and-file employees of respondent Philippine Plaza
Holdings, Inc. (PPHI).
On November 24, 1998, the PPHI and the Union executed
the "Third Rank-and-File Collective Bargaining Agreement
as Amended"[6] (CBA).  The CBA provided, among others,
for the collection, by the PPHI, of a ten percent (10%)
service charge on the... sale of food, beverage,
transportation, laundry an
The distributable amount will be shared equally by all
HOTEL employees, including managerial employees but
excluding expatriates, with three shares to be given to PPHI
Staff and three shares to the UNION (one for the national
and two for the local funds) that may be utilized by... them
for purposes for which the UNION may decide.
On February 25, 1999, the Union's Service Charge
Committee informed the Union President, through an audit
report (1st audit report),[8] of uncollected service charges
for the last quarter of 1998 amounting to ?2,952,467.61.  revenue transactions falling under “Negotiated Contracts” and/or
Specifically, the audit report referred to the service charges
from the following items: (1) "Journal Vouchers;" (2)
"Banquet Other Revenue;" and (3) "Staff and Promo."  The
Union presented this audit report to the PPHI's
management... during the February 26, 1999 Labor
Management Cooperation Meeting (LMCM).[9]  The PPHI's
management responded that the Hotel Financial Controller
would need to verify the audit report.
Through a letter dated June 9, 1999,[10] the PPHI admitted
liability for P80,063.88 out of the P2,952,467.61 that the
Union claimed as uncollected service charges.  The PPHI
denied the rest of the Union's claims because: (1) they were
exempted... from the service charge being revenues from
"special promotions" (revenue from the Westin Gold Card
sales) or "negotiated contracts" (alleged revenue from the
Maxi-Media contract); (2) the revenues did not belong to the
PPHI but to third-party suppliers; and (3) no revenue was...
realized from these transactions as they were actually
expenses incurred for the benefit of executives or by way of
good-will to clients and government officials.
Union:
It maintains that the specified entries/transactions are revenue-
based transactions which, per Section 68 and 69 of the CBA,
clearly called for the collection and distribution of a 10% service
charge in favor of the covered employees.
The Union contends that in refusing to collect and remit the CBA-
mandated service charges that the PPHI insists were non-
“Special Rates,” the PPHI, in effect, contravened the employees’
rights to service charges under the law and the CBA.
The Union also contends that the term “Negotiated Contracts”
should be applied to “airline contracts” only that they (the Union
and the PPHI) intended when they executed the CBA.  It points
out that at the time the CBA was executed, the PPHI had an
existing agreement with Northwest Airlines to which the term
“Negotiated Contracts” clearly referred to.
ISSUE:
Whether or not the revenues from "special promotions" or
"negotiated contracts" are subject to the 10% service
charge.
RULING:
Nature of a CBA; rules in the interpretation of CBA
provisions
A collective bargaining agreement, as used in Article 252 (now
Article 262)27 of the Labor Code, is a contract executed at the
request of either the employer or the employees’ exclusive
bargaining representative with respect to wages, hours of work
and all other terms and conditions of employment, including
proposals for adjusting any grievances or questions under such
agreement.28  Jurisprudence settles that a CBA is the law
between the contracting parties who are obliged under the law to
comply with its provisions.29
As a contract and the governing law between the parties, the
general rules of statutory construction apply in the interpretation
of its provisions.  Thus, if the terms of the CBA are plain, clear
and leave no doubt on the intention of the contracting
parties, the literal meaning of its stipulations, as they appear
on the face of the contract, shall prevail.30  Only when the
words used are ambiguous and doubtful or leading to
several interpretations of the parties’ agreement that a resort
to interpretation and construction is called for.31
No service charges were due from the specified
entries/transactions; they either fall  within the
CBA-excepted “Negotiated Contracts” and
“Special Rates” or did not involve “a sale
of food, beverage, etc.”
The Union anchors its claim for services charges on Sections 68
and 69 of the CBA, in relation with Article 96 of the Labor Code. 
Section 68 states that the sale of food, beverage, transportation,
laundry and rooms are subject to service charge at the rate of ten
percent (10%).  Excepted from the coverage of the 10% service
charge are the so-called “negotiated contracts” and “special
rates.”
Following the wordings of Section 68 of the CBA, three requisites
must be present for the provisions on service charges to operate:
(1) the transaction from which the service charge is sought to be
collected is a sale; (2) the sale transaction covers food,
beverage, transportation, laundry and rooms; and (3) the sale
does not result from negotiated contracts and/or at special
rates.
In plain terms, all transactions involving a “sale of food, beverage,
transportation, laundry and rooms” are generally covered. 
Excepted from the coverage are, first, non-sale transactions or
transactions that do not involve any sale even though they involve
“food, beverage, etc.”  Second, transactions that involve a sale
but do not involve “food, beverage, etc.”  And third, transactions
involving “negotiated contracts” and “special rates” i.e., a “sale of
food, beverage, etc.” resulting from “negotiated contracts” or at
“special rates;” non-sale transactions involving “food, beverage,
etc.” resulting from “negotiated contracts” and/or “special rates;”
and sale transactions, but not involving “food, beverage, etc.,”
resulting from “negotiated contracts” and “special rates.”
Notably, the CBA does not specifically define the terms
“negotiated contracts” and “special rates.”  Nonetheless, the
CBA likewise does not explicitly limit the use of these terms to
specified transactions.  With particular reference to “negotiated
contracts,” the CBA does not confine its application to “airline
contracts” as argued by the Union.  Thus, the term
“negotiated contracts” should be read as applying to all
types of negotiated contracts and not to “airlines contracts”
only.  This is in line with the basic rule of construction that when
the terms are clear and leave no doubt upon the intention of the
contracting parties, the literal meaning of its stipulations shall
prevail.  A constricted interpretation of this term, i.e., as
applicable to “airlines contracts” only, must be positively
shown either by the wordings of the CBA or by sufficient
evidence of the parties’ intention to limit its application.  The
Union completely failed to provide support for its constricted
reading of the term “negotiated contracts,” either from the
wordings of the CBA or from the evidence.

Our consideration of the records taken under our limited factual

review power convinces us that these specified
entries/transactions are indeed not subject to a 10% service
charge.